Outlooks for Goodyear, PolyOne reduced

KeyBanc Capital Markets has reduced its earnings forecasts for Goodyear Tire & Rubber Co. and PolyOne Corp., and has lowered its investment rating on the latter.
Polymers company PolyOne had its rating dropped to underweight from hold and its 2006 and 2007 earnings estimates reduced. Separately, Key also lowered its full-year target for Goodyears bottom line to a loss of 68 cents per share from a per-share profit of $1.05.
PolyOne investor relations officer Dennis Cocco declined to comment on the report, while a Goodyear spokeswoman did not immediately return a call for comment this afternoon.
For PolyOne, the rating change reflects KeyBancs belief that the company in Avon Lake will come under pricing and volume pressures, Keys Saul H. Ludwig wrote in a published research report. He now expects PolyOne to earn 90 cents per share for 2006, down from 95 cents, and for the company to earn 60 cents per share in 2007, a drop from his previous forecast of 85 cents.
Polyone in October hired former General Electric executive Craig Nikrant to be vice president and general manager of its North American Engineered Materials business unit. Mr. Ludwig acknowledged such hiring as being a sound strategy, but also said it will take time and investment to effectuate the transformation in what is a very challenging industry.
Meantime, Mr. Ludwig cited the ongoing strike at the tiremaker in revising downward the short-term prospects of Goodyear. Long term, though, Mr. Ludwig increased his 2007 estimate to $1.75 a share from $1.35 based on the strike possibly ending soon, and savings through a marginal increase in raw materials costs and other measures.